Amazon Reportedly Planning An Ad-Supported Video Service That Will Be Cheaper Than Netflix

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Gus Ruelas/Reuters

Amazon CEO Jeff Bezos

Amazon is reportedly planning to launch an ad-supported media streaming service for music and videos, the New York Post reports.

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The service would exist in addition to its $99 Prime membership subscription, which includes free, two-day shipping on thousands of items alongside music, TV, and movie streaming options.

The Post reports that the new service would likely compete with Netflix and Hulu, while under-cutting them on price (Netflix costs and Hulu Plus cost $7.99 a month).

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The Wall Street Journal reported similar plans in March, but pegged the service as being free. At the time, Amazon denied that it had plans to offer a free streaming-media service. Business Insider has reached out to Amazon and will update when we hear back.

At its core, the idea makes sense.

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Amazon could use this new, cheaper streaming service as a way to ease people into its ecosystem so they'll be more likely to eventually make the jump to Prime, while also giving it a way to entice potential customers who don't care about Prime's free shipping but want a Netflix alternative.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.